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Finance APY
Comparing borrowing costs) Stephens Security has two financing alternatives: (1) A publicly placed $50 million bond issue. Issuance costs are $1 million, the bond has a 9%
Coupon paid semiannually, and the bond has a 20-year life. (2) A $50 million private placement With a large pension fund. Issuance costs are $500,000, the bond has a 9.25% annual Coupon, and the bond has a 20-year life. Which alternative has the lower cost (annual percentage Yield)? |
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